Government is turning to industry not just to round up players for huge projects, but to honcho them, too.
One of the most memorable Super Bowl commercials is an ad for a technology services company featuring men on horseback trying to drive squalling cats across an open plain. "Anybody can herd cattle," drawls a chiseled rider in a black hat. "Holding together 10,000 half-wild shorthairs? That's another thing altogether." Managing a big, complicated government program is like that. Just ask the catpokes in an increasingly popular kind of roundup known as system-of-systems integration.
Federal agencies are turning to industry to tame projects they don't have the acquisition, scientific and engineering wherewithal to handle themselves. They pay companies called lead systems integrators-usually large firms already selling to government-to lasso large numbers of independently developed technical and organizational components and corral them in a networked engineering enterprise whose sum is intended to be greater than its parts.
"Whether you're building satellites or ships, there are thousands of suppliers and thousands of people working on the team," says Sidney Fuchs, a former CIA officer who presides over a lead systems integrator-the civilian agencies group at Northrop Grumman IT in Herndon, Va. "How you structure the team and build the integrated schedules," says Fuchs, "now, that's an art."
Industry-led integration on a grand scale isn't a new concept. NASA has done it for years, to a limited degree, in the space shuttle and international space station programs. The Missile Defense Agency pays Chicago-based Boeing to oversee development of its Ground-Based Midcourse Defense system. But the agency credited with launching the current trend-shifting responsibility not only for schedules and costs, but also for procurement-is the Army. In 2002, it tapped Boeing and key subcontractor Science Applications International Corp., based in San Diego, to hire and manage hundreds of companies designing and developing the 18 separate components of its multiyear, multibillion-dollar Future Combat Systems program.
Lead systems integrators are prime contractors on steroids. They generally have more program management responsibilities than do primes, including greater involvement in requirements development, design and source selection of major system and subsystem contractors, according to a March 2005 Government Accountability Office report on Future Combat Systems (GAO-05-442T).
The Army needs a major infusion of expertise to deal with FCS, according to GAO, which describes it as the greatest technology integration challenge the Army has ever undertaken. The operating systems have 34 million lines of software code. At least 53 new technologies are considered crucial to FCS performance. The 18 major weapons systems must be designed and integrated simultaneously within strict size and weight limitations, and synchronized with 157 complementary systems. FCS will require a first-of-its-kind communications network with unprecedented mobile and high-speed voice, data and video transmission capabilities. The Army told GAO it didn't have the resources or flexibility to field 15 FCS-equipped brigades by 2032-which was the original plan-using a traditional acquisition process.
Because of FCS in particular, the growing practice of using lead system integrators has caught the skeptical eye of lawmakers and watchdogs worried that the government isn't saving any money and might be surrendering too much control. "The government has done integration quite well in some instances," says Philip Coyle, a Clinton administration assistant defense secretary now advising the Washington-based Center for Defense Information. "Private industry has said to the government, 'We can do it better and cheaper.' I think it's debatable as to whether that's really turned out to be the case."
Mastering a Megasystem
Anticipated costs for FCS have risen steadily, and the completion date has slid four years. The 2006 Defense Authorization Act requires the Pentagon to report this year on how its use of lead systems integrators can be improved. "LSI has got some bad press, I think, based on a lack of understanding more than anything else," says Daniel Zanini, a retired Army lieutenant general now managing the FCS program at SAIC.
Zanini commanded the 8th Army in Korea, overseeing a workforce of 55,000 U.S. and Korean civilians and military personnel and supporting infrastructure at 91 installations. In the 1990s, he worked as a concept developer in the Army digitization effort that followed the first Persian Gulf War. That experience made clear that integrating troops and their armor after the fact wasn't going to work, and it helped drive the Army to try the lead system integrator approach. "Soldiers will tell you they aren't integrated," says Zanini. An Abrams tank traveling at 40 mph can see and destroy a target from a distance of two or three miles. It's a capability like no other "but it goes nowhere beyond the tank," the former three-star adds. "Their buddy, sitting right next to them in another tank, has no knowledge about what they just shot at unless they're looking at it themselves through their own sight."
The Army wants this information shared instantly-not just between tanks, but also among infantry carriers, airplanes, trucks, radars and other sensors, troops and leaders on and off the battlefield. With estimated research, development and production costs as high as $157 billion through 2022, the FCS megasystem would replace current systems such as the M-1 Abrams tank and the M-2 Bradley infantry vehicle with a new family of lighter, rapidly deployable ones. It includes unattended intelligence, reconnaissance and surveillance sensors; guided missiles and smart bombs; four classes of unmanned aerial vehicles; three classes of robotic ground vehicles; eight types of manned ground vehicles; and the soldiers and their personal gear. An advanced communications network is the rope that ties everything-and everyone-together.
Facing the same shortage of qualified acquisition specialists and technical experts that is plaguing other agencies, the Army decided that the complexity of such a system required a special kind of management approach. Instead of writing a requirements document, soliciting bids and selecting a prime contractor in the usual way, the Army offered Boeing and SAIC a nontraditional, $21 billion cost reimbursement contract that wasn't subject to federal acquisition regulations. Officials negotiating terms and conditions had considerable flexibility. The Army maintains oversight by participating in integrated product teams that make coordinated decisions about requirements, design and source selection.
Counting suppliers hired by the two leads and 17 top subcontractors, the total number of FCS participants is 535. Tying them all together is a sophisticated information system offering a database full of designs and specifications for every FCS component, common management tools and the ability to analyze any team member's cost and schedule performance on any piece of work. "In the early days, it was like herding cats, but today, it's anything but that," says Zanini. "Today, it operates as a very well-oiled machine." And he estimates the team is fielding equipment at least 30 percent faster than it could under a traditional contract. The chief executives of Boeing, SAIC and the subcontractors meet quarterly to assess progress with the Army secretary, chief acquisition executive and chief of Training and Doctrine Command. A Government Accountability Office representative usually sits in. Program decisions are made in concert with Army shoppers and operators.
In 2004, the service restructured FCS to strengthen program management and speed delivery of certain components to the battlefield as early as 2008. The re-scoping also stretched the schedule for full combat capability to 2014 and increased its cost by 35 percent. The service considers 18 of its critical technologies to be at a technical readiness level of six or higher, meaning a model or prototype has been tested in a relevant environment. GAO sees things differently. In another March 2005 report (GAO-05-428T), it assessed the technical and managerial challenges confronting the Army with FCS. Two years in, with $4.6 billion already spent, GAO reported, program requirements weren't firm and only one of more than 50 technologies was mature. The congressional auditors predicted that slow progress on the network, software and requirements would lead to costly problems and "dire" consequences later. They questioned whether FCS is "doable" at all, let alone within a set schedule and budget.
Interest in the use of industry integrators for big, complicated projects is growing because government missions are becoming increasingly sophisticated, and federal managers-given the oversight demands-prefer not to deal with multiple companies for technology development, program schedules, on-site personnel and end-user support. "What they want is an organization that can deliver all those things under one umbrella," says Fuchs. He counts himself among thousands who left government and took their expertise with them after fiscal belt-tightening by the Clinton administration left the Defense budget and others at post-Cold War lows. Many of the departed spent their federal careers on single programs and knew the systems inside and out. When they left, an agency had two choices to keep a mission going: Bring in a contractor with similar experience or hire a civil servant with fewer skills. "The logical step was to have the contractors do it," Fuchs says.
Under contract to NASA last year, his company explored concepts for a proposed space shuttle replacement that can leave Earth orbit. Northrop Grumman IT hoped to get a piece of the management business, but NASA Administrator Michael Griffin defied logic. He pulled the integration responsibilities back in-house in an effort to rebuild technical capabilities the space agency has lost. "As a taxpayer, I think it's the right thing to do-if he can get the right people to do it," says Fuchs. "I've always said that a skillful customer increases everybody's chances for success."
No matter who's in charge, collaboration still requires government and industry to match wits, and that's not easy.
At the same time as the government has lost civil servants with the necessary skills and experience to go head-to-head with LSIs, the process of defining technical requirements for complex systems has changed-and not necessarily for the better. The design of highly complex, mature multiyear programs such as the space shuttle used to determine their acquisition and management structure. Today, technical approaches have become less powerful, and program management is more independent. "People aren't seeing the cause and effect. These days, you see organizational statements and decisions being made by the program offices that are not necessarily consistent with a strong top-level technical design," says John Thomas, chief engineer with Booz Allen Hamilton in McLean, Va. He blames the change on a loss of institutional memory. A trusted process can become a troubled process if an organization forgets why it was instituted in the first place, he says, and he sees it happening in industry just as much as in government.
In addition, government is going horizontal. Missions are getting combined among agencies-Homeland Security, the intelligence community and the Defense Department, for example. There's something appealing about a contractor that promises to eliminate stovepipes because it serves all three realms.
These currents of change add up to considerable confusion for program managers on either side of the equation. The line demarcating what is or isn't an inherently governmental responsibility is getting fuzzier. "That line of responsibility needs to be more clear," says Fuchs. "I think that's the cause of some of the issues today."
One agency that doesn't outsource management is the Army Corps of Engineers. It contracts for as much as 75 percent of its engineering services and almost all of its construction work. But it keeps a firm grip on integration of mammoth projects such as the New Orleans Hurricane Protection System, which includes hundreds of miles of levees stretching through a jumble of local, state and federal jurisdictions. The Corps builds the levees, but others approve the designs or own and maintain the finished structures. That's part of what makes it such a complex system.
"The Corps takes its inherent governmental oversight responsibility extremely seriously. Always has. And always will. That is the overarching rationale," says Thomas Waters, chief of civil works policy and policy compliance. In the Corps' case, control breeds consistency. Keeping the integration work in-house allowed the agency to establish business practices and quality standards that contractors have come to appreciate. "I think they like working for us," says Waters, "and the primary reason is that they know what to expect."
He says the practice helps the Corps ensure that it is maximizing economic development and enhancing the environment by including project sponsors, environmental regulators and stakeholders, and other federal, state and local agencies in the decision making on every project. "This is an inherently governmental role," he says.
Since Hurricane Katrina thrust the Corps of Engineers into the global spotlight, government critics are keen to use New Orleans' breached levees as an example of integration gone wrong. Waters isn't ready to agree with them-yet. He defends the Corps' quality control and quality assurance procedures as "very, very conscientious and systematic and deliberate." The Corps has launched parallel independent investigations with the National Research Council, the American Society of Civil Engineers and the National Association of Flood and Storm Managers. The probes will consider the storm's force and its effect on the levees as well as the engineering of the structures and all planning and policy decisions that might have affected them. Both reports are due June 1, the first day of the Atlantic hurricane season. "What we do know is that this was an extraordinarily overwhelming, intense storm. That really, at this point, is the only conclusion that we're able to say," Waters says. "As a responsible government agency," he adds, "we've acknowledged that even with the best of processes and practices and intentions that errors and omissions occur. And more important is what you learn and how you apply that knowledge."
Developing a system that compensates for errors and omissions of suppliers and subsystem contractors is the lead integrator's biggest challenge. The LSI can't assume that a team member will do everything poorly, or it will end up duplicating effort. But it must set up the appropriate review processes and oversight, as an independent review of the Missile Defense Agency's Boeing-led Ground-Based Midcourse Defense program cautioned in March 2005.
Designed to shoot down attacking missiles or warheads in flight, GMD is the most complex and visible portion of the Bush administration's plan for a layered defense against intercontinental-range ballistic missiles. The review's authors compared GMD's rapid deployment and development to the Manhattan Project that produced the atomic bomb. Total costs for GMD are unknown, but the Congressional Budget Office recently projected that overall annual missile defense spending will nearly double, to $19 billion, by 2013. As many as 20 GMD interceptor missiles have been placed in silos in Alaska and California already, despite the fact that there hasn't been a successful flight test since 2002. The reviewers said the program's flight readiness certification process lacks rigor and its systems engineering function is weak.
"The devil is in the details," says Coyle, who was the Pentagon's longest-serving director of operational testing and evaluation. He didn't participate in the GMD review, but notes the authors tackled two of what he considers to be the top characteristics of a good integration effort. Good integrators test "early and often" under conditions as realistic as they can possibly make them, Coyle says. They also understand their systems right down to how the individual components work together, and they aren't afraid to halt the process when they see problems on the horizon.
According to Fuchs, industry integrators add significant value with their commitment to invest in research and development, familiarity or similarity with their government customers, and corps of experienced program managers with good organizational skills. "It's not about technology," he says, "it's about herding the cats-getting together the integrated schedule and integrated budgets." He readily acknow-ledges that cost savings is not a potential value of outsourcing project management. For that, he blames the constant struggle to manage the government's ever-changing requirements. "I believe the contractors can do it effectively. I don't know if they can do it cheaper," Fuchs says.
Industry leaders argue that, despite its shortcomings, the LSI approach has produced new management tools that can benefit any number of organizations looking for consistent output from a variety of providers in numerous areas. The practice is bound to spread to nondefense operations as the responsible agencies become more dependent on integrated networks, according to Zanini. Judging from the bollixed response to Hurricane Katrina, disaster relief is a good candidate. "Having an integrated tool kit that allows you to understand where ice is, where sandbags are, where lumber is, where doctors are located, how you get a communications network linked back together again and being able to do that in a dispersed, integrated way," Zanini says, "an LSI could end up pulling that together and managing it."